Financial
And Taxation System
The financial
and taxation system of big companies (annual turnover superior to 250 million
MGF, exclusive of tax, or wages bill superior to 200 million) is managed by the
" Centre Fiscal Pilote des Entreprises " (Pilot Tax Centre of Entreprises).
Companies'
Financial And Taxation System
Subject to international -
bilateral or multilateral conventions - companies are submitted to the following
main taxes and duties :
Constitution duty : it is due on the occasion
of a company constitution or extension, and it is calculated
according to the hereafter degressive tariff:
Capital
not exceeding MGF 50 million: 2 %
Capital
included between MGF 50 and 500 million: 1 %
Capital
beyond MGF 500 million: 0.50 %
(The same tariff is applicable in case of social
capital increase, either by reserves or profits incorporation,
or by means of new assets)
Reserve Incorporation
Tax : 8%.
Professional Tax :
Fixed Duty: MGF 1,500 to MGF 240,000
-
Ad valorem Duty: 1/5
to 1/30 of the facilities rental value
Tax
on companies profits :
The rate currently applied is 35%. However
non-profit making organisms (apart from religious missions, church, cultural association,
public utility association or aiming at the promotion of small and medium-sized
entreprises which are exempted) are taxed at 10% for the income from the renting
of the buildings of which they are owners, and the interests from their cash deposits.
To
determine the taxable profit, in relation to the deductible expenses, the depreciation
of production equipment acquired or made by the company, can be calculated according
to a decreasing system, taking into account the normal duration of depreciation,
and by applying a coefficient varying from 1.5 to 2.5, according to that duration.
Cuts can be granted to investing entreprises:
the tax corresponding to 50% of the amount of the investment
if it consists of investment redeemable over at least 3 years except aircraft
vehicles, ship, building (exclusive of hotel trade)
or the acquisition of an interest in the new capital of entreprises
Concerning the expenses incurred for professional training, supplementary job
creation and the expenses for the building and the maintenance of public infrastructures,
the rates to use for computing the reduction are respectively 10 %, 10 % and 5
%.
Duties
and Direct tax on Hydrocarbon (IDH)
This fiscal regime is applicable
to companies which carry on activities concerning hydrocarbon
Duties 'rate
varies from 8 % to 20 % according to the produced quantity for crude oil; from
5 to 10 % for natural gas.
The duty rate is contractual for the production
of heavy oil and bitumen.
Independently from the duty on hydrocarbon, companies
carrying on the above activities are submitted to the Direct tax on Hydrocarbon
(IDH)
Tax on incomes from movable capitals
(IRCM) :
Rate
: General case 25 %
individual entities 30 % and in this case the IRCM is in
full discharge of the IGR.
On the other hand, interests on sight deposits are
no longer subject to the IRCM.
Standard Tax on Transfers (TFT) :
Rate: 15 % of the gross
amount of transfers.
Value Added Tax (VAT) :
It
concerns operations realized in Madagascar as well as provisions of service when
they are materially executed there, except exemption.
+ VAT rate -
Standard rate set at 20%.
Exportations of goods and services are taxed at 0%
+ Deduction regulations -
Are deductible from VAT:
- VAT distinctly appearing on invoices of non exempted
products or services required by the normal running
of the entreprise.
- VAT paid at importation in the course of the same
bimester concerning materials or products necessary
to the normal running of the entreprise.
+ Exemptions -
All exemptions granted before:
- to NGOs concerning the acquisition of cars.
- to exporters, among whom tax free entreprises and
free-zone, on the purchasing and importation of goods
intended for exportation, are cancelled by the Finance
Law n° 98-013.
Interests
on receivables, deposits and securities collected from banking institutions whose
headquarters are in Madagascar are exempt from VAT.
+ Tax credit -
When deductible VAT is superior to due VAT, the difference
constitutes a tax credit which can be brought forward
to the next bill.
+ Refund credit -
1)
When the tax credit in the periodic tax-return is superior to 50 million MGF,
the company can apply for its refund.
2) As for exporters, the amount of VAT credit repayable
varies according to the rate of sales and services
subject to a rate of 0 % according to the following
table.
3) Provisionally until the implementation of the reimbursement
procedure, tax credit can be transferred to third
parties as before.
Proportion of sales taxed at 0%
in
relation to total sales | Proportion
of refundable VAT
credit | | 9/10
or more | 100 %
| | between
7/10 and 9/10 | 80 % | | between
3/10 and 7/10 | 50 %
| | less
than 3/10 | None |
Excise
Products made in or imported to Madagascar which
appear on the table of rates are submitted to excises
that are collected for the State Budget and whose
rates vary form 10 % to 135 %.
However, regarding cigarettes, whose référence prices
do not exceed those set by a Decree of the Minister
in charge of taxe regulations, a 50 % rebate is applied..
Are exempted from excises :
- products that are used as raw materials in the making
of other products subject to excises ;
- products which, though having not discharged excises,
have been snapped up and transported abroad and travelling
under an excise-bond arrangement ;
- pure alcohol designed for preparing medicines or
used by health and scientific establishments as well
as dematured ethyl alcohol in statutory conditions;
- products and materials going into the making of
medicines.
Taxes on Oil products :
Light
oils and preparations
MGF 183 to MGF 1,412/litre
Medium
oils and preparations
MGF 31 to MGF 235/litre
Heavy
oils and preparations
MGF 166 to MGF 357/litre
Oil
gas and other gas hydrocarbon
MGF 60/Kg
Synthetic
tax
The synthetic tax is a fixed tax representative and in
full discharge from professional tax, non-wage income tax and turnover tax. It
is applicable to independent activities and fixed according to a scale established
in conformity with the annual turnover.
Taxation
Of Individual Entities
Unless convention or formal exemption, income
tax is applied to the whole of income realized in Madagascar by a legal or individual
entity not liable for a profit tax.
The taxpayer is assessed to tax either :
-
on the basis of earned
income,
-
or on the basis of non-wage
income,
The tax is calculated by applying
the corresponding rates to the income brackets liable
to tax. These rates vary from 2 % to 35 % for earned
incomes and from 5 % to 35 % for non-wage incomes.
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